Video

Boxed In

MVPDs Sound Off — and FCC Pushes Back — on Game-Changing New Set-Top Proposal 2/08/2016 8:00 AM Eastern
FCC chairman Tom Wheeler speaks on the agency's new set-top plan

WASHINGTON — “Box” is probably the wrong fighting term to use about the current set-top fracas involving the Federal Communications Commission, multichannel video programming distributors (MVPDs) and Silicon Valley. It’s more like a bare-knuckles cage match over the future of access to video.

 

On one side are the MVPDs, who argue the marketplace is already opening up access to video programming without the FCC forcing providers to disaggregate their programming for reassembly by others.

 

The FCC — pressed by Silicon Valley giant Google, TV-maker Vizio, digital video recorder maker TiVo and others — stands on the other side, saying it’s time to break the MVPDs’ leased lockbox on programming and prices.

 

What’s at stake is nothing less than the future of television and how its viewers will consume it — and who can access the reams of valuable data MVPDs now use to sell to advertisers. The question of who can access that information also poses huge privacy and security issues for TV watchers.

 

In December, the Consumer Choice Video Coalition (CVCC) — backed by Silicon Valley giants including Google, TiVo, Vizio, Public Knowledge, the Writers Guild of America, competitive telecom carrier trade group INCOMPAS (formerly COMPTEL) and others — demonstrated a new set-top box for FCC staffers, hoping to convince the agency to crack open leased cable boxes for competing over-the-top providers. Of the 21 coalition members present, one-third were from Google.

 

Fast-forward to two weeks ago, and Google — which just topped Apple as the world’s most valuable company, at half a trillion dollars in valuation — hosted a similar demonstration of the coalition’s “competitive Navigation device solution” for Capitol Hill staffers. The proposal’s mere existence is a game-changer for third-party devices, and a potential huge victory at the FCC that cable operators and studios say would hurt their businesses, as well as consumers.

 

The FCC has proposed to require cable operators to make their programming available to third parties in a way that cable operators say would force them to re-engineer their networks and strip away copyright and consumer protections.

 

Google and others in the coalition said the proposal creates a “virtual headend” so that an MVPD’s signal can be viewed along with over-the-top offerings on a competitive device. That device could be a box, phone, tablet, smart TV, dongle or even a leased cable box.

 

The idea is that the device allows access not only to the MVPDs’ programming, but to content from the Internet, including Netflix, Amazon Instant Video and YouTube.

 

More worrisome for cable operators, it could allow these third parties access to the most precious of all screen space: the first thing viewers see when they turn on the TV. Might it be an ad from Google?

 

Cable operators, movie studios and others have formed the Future of Television Coalition to fight the proposal. It’s not that they don’t want their content side by side with OTT, they said (and that’s already happening in the marketplace without FCC intervention). Rather, they see the FCC’s move as an unnecessary thumb on the scale for the Googles and TiVos of the world.

 

“It disaggregates the provider of the service from their customer, which no business is really going to like,” one coalition source said. “And it gives third parties a way to come in and get revenue out of the ecosystem that devalues the content.”

 

Coalition co-chairman Alfred Liggins, the president and CEO of cable network TV One, said, “The ‘AllVid’ proposal is a brazen money grab by Big Tech companies that would do severe damage to the programming ecosystem, and in particular, niche and minority-focused networks.”

 

Cable operators argue that the proposal is essentially a revival of the AllVid proposal the FCC offered up in 2010. Wheeler and FCC officials, though, say the new plan is far from that.

 

Wheeler has pushed the plan with tough talk about the skyrocketing price of set-tops and the lack of competition. He went so far as to use a Public Knowledge/Consumer Federation of America chart at a press conference to illustrate why it’s necessary to “unlock” the box for edge providers and consumer groups. (Gigi Sohn, a top adviser to Wheeler, is the co-founder of Public Knowledge.)

 

At press time, cable operators and other members of the Future of Television Coalition hadn’t seen Wheeler’s notice of proposed rulemaking, so all they had to go on in formulating reasons why the FCC was on the wrong track were the painful (for them) memories of AllVid and the CVCC proposal.

 

Multichannel News talked to senior FCC officials who have seen the NPRM to get their responses to the cable operators’ key concerns — and they have a ton of them.

 

So, in one corner, from an NCTA filing with guidance from Future of TV Coalition sources, are the perceived blows the chairman’s proposal would inflict on a video-access marketplace if it unfolds along the lines of the proposal put forth by Google et al. In the other, top FCC officials, speaking not for attribution, weigh in with their responses.

 

Would this turn the “opening screen” — what viewers see when they turn on their TV sets — over to a third party?

MVPDs: The first screen could be “Welcome to Google” only, with ads down the side. How would a Cox Communications or Comcast subscriber get directly to their channel lineups (on the same channels) on that opening screen as well?

 

FCC: “While we cannot predict the design or interface that device makers and software developers may come up with, they will be required to pass through all of the content the consumer is entitled to receive. The Notice of Proposed Rulemaking asks how that should be defined,” an FCC source told Multichannel News. “This proposal is intended to introduce competition in devices and apps available to consumers. If a consumer does not like the interface or user experience available on one offering, they could look for an alternative offered by a competitor.” In other words, what that opening screen will show is yet to be determined.

 

What happens to programming agreements?

MVPDs: Retail devices would have access to parts of the MVPD service from which they could create their own service offerings, without responsibility or compensation to programmers or MVPDs.

 

FCC: “The CableCard works the same way,” an FCC source said. “It gives an independent vendor such as a TiVo access to the MVPDs’ programming and guide information. And none of these things have happened.

 

“And on the compensation issue: If you think about this logically, if I’m a Comcast subscriber, I’m paying Comcast whether I’m using their box or whether I use a TiVo box,” the agency source added. “Comcast is then passing that money on to the programmers, based on the fact that I count as one of their eyeballs. They are also able to sell advertising based on the fact that I count as one of their eyeballs. Nothing that our proposal would do would change any of that. They keep their subs; they keep their subs’s money. We’re just saying you should be able to get a box or view it with an app on any device you want without disrupting any agreement between the programmer and the MVPD.”

 

Under the CableCard regime, third parties are not required to display the guide in the same manner as MVPDs, but they are required to pass through a channel lineup, and that won’t change, the official said. “Any package that the consumer has paid for shall be passed through in full and displayed in full by the third party,” the FCC source said.

 

In addition to those channels being available in order, they can also be searched by category in a similar way as can be searched today. “If an MVPD can do that today and be in compliance with a third-party programming agreement, why wouldn’t a third party be able to do that?”

 

Would this proposal infringe on copyrights?

MVPDs: Device manufacturers would be allowed to infringe on programmers’ copyrights by displaying and copying protected works through manufacturers’ own services without permission or compensation.

 

FCC: “Nothing we are doing undoes any copyright protections that exist today.

 

“As part of our proposal, we would require that the copy-protection information be transmitted from the MVPD to the device or app, and that the device or app must honor that copy protection mandate from the programmer.” If the device doesn’t honor copy-protection rules, programmers would have the same redress as they do under copyright, the official pointed out, though that is not the FCC’s purview.

 

Would consumers lose modern features offered by the box, like Time Warner Cable’s “Start Over?”

MVPDs: Consumers would be denied access to many modern MVPD service features like voice search, starting a show in progress at the beginning and other interactive enhancements, which MVPDs rely on to ensure the quality of their user experience and to provide value to their customers and stay competitive.

 

FCC: If viewers want such enhancements, they can keep them. “We’re not telling anyone they have to give up their cable box. All we are saying is that, as a consumer, if you want to buy somebody else’s box, you should be able to. And who’s to say that new box won’t have those features or a different feature that consumers want?”

 

Wouldn’t the proposal require some sort of in-home adapter, not to mention added costs for consumers?

MVPDs: MVPDs must provide customers with a government-designed in-home, leased device in order to receive MVPD service on a retail device, raising equipment and energy costs for consumers. FCC: Officials said that sounded like AllVid, which they said was not the chairman’s proposal. “We are not designing a device. In fact, we are not even mandating a device. We are very pro-app, and software and competitive devices [in] whatever format these innovators want to develop in. We are just trying to encourage that. AllVid was two boxes. We were telling people we are going to design a box and you have to have two boxes to get your cable programming. But that’s not what we are doing here.

 

“In fact, we would love it if our proposal resulted in no boxes. The way of the future is not the box. Wouldn’t it be great if you could just hook up your MVPD service to your Smart TV and you could see everything?”

 

Would this complicate issues like privacy, and perhaps thwart emergency alerts?

MVPDs: Device manufacturers are not obligated to abide by Title VI consumer protection regulations such as, among others, privacy protections and emergency alert requirements.

 

FCC: “Our proposal specifically seeks comment on maintaining emergency alerting. The safety of the public is very important to the commission. Nothing that we do in our proposal to create a competitive marketplace will undermine emergency alerting.”

 

As to consumer-protection regulations, the official said that MVPDs do have different obligations under the Cable Act than device manufacturers. “Title VI applies to MVPDs only.” But the official said that those device manufacturers are already subject to some pretty strict privacy laws and regulations of their own, enforced by the Federal Trade Commission — citing a “ton” of consent decrees against app and device manufacturers and the fact they are subject to strict California laws on privacy, as well as strict European Union privacy regulations for any device or app sold in member countries.

 

Can this make it easier for hackers since there’s now a single point of attack?

MVPDs: Cable operators and other providers would have to use a common content encryption technology (DTCP-IP), creating a single point of attack for hackers. DTCP-IP also does not support today’s rapidly evolving video business models.

 

FCC: That is a reference to what CVCC is asking, said one official, and the chairman’s proposal “is not that.” He said the chairman’s proposal “recognizes there are a wide variety of methods for protecting content from theft and misuse, and TV providers ought to use multiple systems,” and so the proposal “does not prescribe any particular content-protection system” so those can evolve. But the proposal does recognize that third parties need access to those content protection systems, whatever they wind up being, so the proposal requires that a pay TV provider license at least one such system on reasonable terms. “There will be no government standard that we select, or even that we approve” and the FCC remains “tech-neutral” on hardware vs. software.

 

Doesn’t this force MVPDs to essentially give away their guide data?

MVPDs: MVPDs would be required to provide program-guide data, which they do not own, to retail devices, thereby exceeding their licenses with guide data suppliers.

 

FCC: The FCC will seek comment on the “exact level” of information that is needed to pass through from an MVPD to a third party in order to maintain all of the rights the consumer has paid for.

 

Could this focus on box-vs.-no box stifle innovation in next-generation technologies, not to mention the growing demand for apps?

MVPDs: Providers would have to support an expensive legacy technical solution, thereby interfering with plans to deploy next-generation systems and technologies (e.g., IP cable and IPv6).

 

Moreover, this would force cable operators and others to implement an inflexible, one-size-fits-all technology mandate that ignores the video marketplace transition to apps and creates a drag on innovation in the highly dynamic video-device marketplace.

 

FCC: “That, again, sounds like AllVid. This isn’t AllVid.

 

“It’s very clear by everything we have put out that we are very supportive of apps. We think apps are the way of the future and what we are proposing to do is tech-neutral. It does not mandate a box. If people want to develop a box and consumers are happy with boxes, they are welcome to them. But what we are trying to do here is let people innovate, whether they want to do boxes or something that is like the Amazon Fire stick or if they want to do an app. All options are open in the proposal.”

 

How would technology standards be decided for this new sharing arrangement?

MVPDs: The proposal relies on standards not yet invented or implemented and would take years to develop — by which time the “solution” will likely have become outdated.

 

FCC: On the one hand, the official said, cable operators have consistently said they don’t want the agency setting a standard and “now they aren’t happy with us wanting to let a standards body set the standards, a body we think they should be a part of. It is tough to have it both ways.

 

“We are requiring the standards be set by an open standards body with participation from MVPDs, CE manufacturers, app developers and generally following the executive guidance on open standards bodies. We don’t want to be in the middle of it. It is not a government-mandated standard.”

 

How does this proposal change what is already happening in the marketplace, with viewers accessing cable and over-the-top side-by-side without the FCC stepping in?

MVPDs: This is a solution in search of a problem.

 

FCC: “It is very true that some of the larger MVPDs make apps available to certain devices where they entered into contracts with those devices.

 

“The problem is, today if I open up, say, a Comcast app on my Smart TV, I can’t search what is available to me through my Comcast subscription versus what is available to me from Netflix. I have to go into each app, search inside that app, get out, go to the next screen if I want to go to Hulu after that.

 

“The nice thing about being able to let unaffiliated vendors develop apps for devices is that we anticipate functionality very similar to what TiVo does today, allowing consumers to search across all the sources of programming that they have access to because they pay for many of these things. It will be easier for consumers to find the programming they want at the price they want to pay for it.”

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